Central Bank must outline what action is further warranted against Davy

The Central Bank must outline what further action will be taken following breaches of market rules through the sale of Anglo Irish Bonds at J&E Davy stockbrokers, a Fine Gael TD has said.

Neale Richmond, a member of the Joint Oireachtas Committee on Finance, was speaking as the Central Bank of Ireland appeared before it to discuss the fallout from its investigation into Davy and what lessons will be learned.

Deputy Richmond said: “From the outset, I acknowledge and indeed welcome the Central Bank findings that Davy fell well below the standard required in meeting its regulatory obligations in relation to conflicts of interest and personal account dealing.

“The importance of an independent regulatory is that they should be independent of the political system and allowed to determine, based on the facts and their investigation, what sanctions are appropriate. In this case, the Central Bank determined that a public reprimand and significant fine was warranted.

“However, questions remain and we now need answers from the regulatory authority as to how they came to their conclusions and what actions they will take next.

“The Davy consortium was formed in November 2014 and it was the subject of media reports four months later. This indicates that the Central Bank discovered this transaction in March 2015.

“This begs the question as to why it took the Central Bank a full six years to conclude its investigation into the company? Despite the Central Bank’s assertions of the complexities involved in this investigation, the delay in processing this investigation if not inordinate, is far from ideal.

“The Central Bank is seeking greater powers, yet this has the appearance of an instance where it failed to correctly discharge its existing powers in a timely way.

“It is widely accepted that the Central Bank’s powers to hold individuals to account require strengthening. However, the Central Bank already has certain powers to hold individuals to account. Those being the imposition of (i) a reprimand, (ii) a fine, (iii) a prohibition notice.

“Why have the existing powers of the Central Bank not been exercised in respect of individuals? The reasoning of the Central Bank does not seem to stand up to scrutiny.

“The public need to know what steps are being taken now in respect of the holding of individuals to account?  Accepting that the Central Bank cannot comment on individual cases, the Central Bank must confirm that further action is being taken in respect of Davy especially as many if the individuals involved in this investigation are still centrally involved in this sector.

“The Central Bank issued a press statement announcing the imposition of a fine on Davy and the public impression was that the company was fined but no individuals were being held to account. There was no indication that individuals were being pursued. This sent the wrong message out to the public, to the financial services sector both here and around the world.

“The response from Davy themselves has been slow and disappointing but there are many lessons that need to be learned from this whole process to ensure we continue to have a trusted and accountable financial services sector with a transparent regulatory system,” Deputy Richmond concluded.